The government has raised its proposed Pay As You Earn (PAYE) tax exemption limit from Ksh30,000 to Ksh32,333 per month, offering relief for more low-income earners.
President William Ruto announced the revised proposal on Tuesday, October 20, saying the government intends to reduce the tax burden on all workers, particularly those earning modest salaries.
“We have prepared a proposal to exempt Kenyans earning Ksh32,333 per month or less from paying PAYE income tax. For workers on modest income, every shilling saved means more money for food, transport and school expenses,” he said.
Speaking during the 63rd Mashujaa Day celebrations at Kipchoge Keino Stadium in Uasin Gishu, Ruto said he had already directed the National Treasury to present it to Parliament next week for consideration.
President William Ruto inspecting a guard of honour during the 63rd Mashujaa Day Celebrations at Kipchoge Keino Stadium in Eldoret on Tuesday, October 20, 2026.
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“I have directed the National Treasury to place these proposals before Parliament next week,” he added.
The President said the government would follow the necessary legislative and fiscal processes to ensure the proposed tax relief is implemented in a more sustainable and transparent manner.
“These measures address the barriers that Kenyans confront today. The necessary legislative and fiscal processes will follow, with attention to sustainable financing, transparency and effective implementation,” he stated.
The latest revised proposal shifts from the initial plan announced by the government in May this year, which sought to exempt workers earning Ksh30,000 per month or less from PAYE.
Under the current system, workers pay 10 per cent tax on the first Ksh24,000 they earn monthly and 25 per cent on the next portion up to Ksh32,333, with higher earners paying more.
Similarly, Kenyans earning above Ksh32,333 to Ksh500,000 are deducted 30 per cent monthly, while those earning above Ksh500,000 are taxed at the rate of 32.5 per cent.
However, a monthly personal relief of Ksh2,400 effectively offsets the PAYE payable by employees earning up to Ksh24,000, meaning they generally pay no income tax after the relief is applied.
The proposal is not yet in effect and must go through the required legislative processes before any changes to the current PAYE framework can be implemented by the National Treasury.
Treasury CS John Mbadi speaking during an event at State House, Nairobi, on June 30, 2026.
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